Have equity in your home? Want a lower payment? An appraisal from Timely Appraisal Services can help you get rid of your PMI.

When buying a house, a 20% down payment is usually the standard. The lender's liability is oftentimes only the difference between the home value and the sum remaining on the loan, so the 20% supplies a nice buffer against the charges of foreclosure, reselling the home, and typical value variations in the event a purchaser defaults.

The market was accepting down payments as low as 10, 5 and often 0 percent in the peak of last decade's mortgage boom. How does a lender endure the additional risk of the small down payment? The solution is Private Mortgage Insurance or PMI. This additional policy guards the lender in case a borrower is unable to pay on the loan and the market price of the property is lower than what is owed on the loan.

Since the $40-$50 a month per $100,000 borrowed is lumped into the mortgage payment and many times isn't even tax deductible, PMI can be pricey to a borrower. It's advantageous for the lender because they collect the money, and they get paid if the borrower is unable to pay, contradictory to a piggyback loan where the lender absorbs all the costs.

Does your monthly mortgage payment include PMI? Contact us, you may be able to save money by removing your PMI.

How can home buyers prevent bearing the cost of PMI?

The Homeowners Protection Act of 1998 requires the lenders on nearly all loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the initial loan amount. Keen homeowners can get off the hook beforehand. The law guarantees that, upon request of the home owner, the PMI must be dropped when the principal amount equals only 80 percent.

It can take many years to get to the point where the principal is just 20% of the original amount of the loan, so it's necessary to know how your home has grown in value. After all, all of the appreciation you've accomplished over time counts towards removing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold? Your neighborhood may not be following the national trends and/or your home might have secured equity before things simmered down, so even when nationwide trends hint at falling home values, you should realize that real estate is local.

An accredited, licensed real estate appraiser can help homeowners understand just when their home's equity rises above the 20% point, as it's a tough thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At Timely Appraisal Services, we're experts at determining value trends in Quinlan, Hunt County and surrounding areas, and we know when property values have risen or declined. When faced with information from an appraiser, the mortgage company will usually cancel the PMI with little anxiety. At that time, the homeowner can relish the savings from that point on.

Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year